Trial scuttles big-money orchard scam

An elaborate tax evasion scam run by up to a dozen migrant kiwifruit contractors has been blown wide open by the conviction of an Indian immigrant on tax evasion charges.

Yoginder Sharma, 23, pleaded guilty in the Tauranga District Court this week to failing to pay almost $170,000 in taxes.

He was remanded in custody until April 16 for sentencing.

Sharma was the "front-man" for a gang of tax dodgers operating in Western Bay of Plenty kiwifruit orchards.

After his arrest, he gave the Inland Revenue Department details of the scam, and named up to a dozen contractors who were involved in it.

Sharma is the second Indian migrant in the past five months to be convicted of running tax scams in the Western Bay of Plenty.

Last November, 27-year-old asylum-seeker Vishuuvardhan Polishetty was jailed for two years and three months on tax evasion charges amounting to more than $300,000.

Last April, about a year after he arrived in New Zealand, Polishetty made a claim for refugee status and was given a work permit. From his initial base in Blenheim, he set up a company, Grace Horticulture, as an orchard picking and pruning business.

The company was registered with with the Inland Revenue Department for income tax, GST and as an employer.

Over the following months, Polishetty moved from Blenheim to Hastings to Te Puke, writing out invoices and being paid for work done by other contractors.

The payments were banked, withdrawn in cash and handed over to the other contractors, minus a fee.

That way, the contractors won a tax advantage.

An IRD spokesman said Sharma had been operating the same scheme as Polishetty.

He said the department was investigating other cases involving migrant workers.

The one major difference between Sharma and Polishetty was that Sharma was using false passports and drivers' licences to set up companies, rather than operating the scam in his own name.

This week in court, Crown prosecutor Heidi Wrigley revealed how Sharma set up two companies using false documents in the names of Vijay Gerg and Agha Singh.

Using these illegal documents Sharma started two companies, Vihay Gerg Ltd and Singh Enterprises, and started issuing invoices to kiwifruit contractors through the companies.

From these invoices almost $600,000 was deposited into the accounts of Sharma's two companies in less than two months and then withdrawn soon after.

The companies did not pay employee tax or GST to the IRD.

Mrs Wrigley told the court Sharma was believed to have fiddled far more than the $167,000 the IRD had so far discovered.

"The full extent of the defendant's offending is not known as numerous payments ... were cashed without being deposited into any of the company bank accounts," she said.

Mrs Wrigley said Sharma had associates in the scheme, and up to 12 other contractors could be prosecuted.

Tauranga MP and New Zeealand First leader Winston Peters said yesterday that he had alerted the IRD and the Immigration Service to the "widespread scams" last year but neither department had done anything about them.

He suggested the Immigration Department needed to have a "flying squad" of officials, who would "swoop down" on orchards and check the legality of immigrant workers.

How it works

* Tax evader sets up a fruitpicking company, registered with the IRD.

* He travels the region, writing invoices and being paid for work done by other contractors.

* The payments are banked, withdrawn in cash and handed over to the other contractors minus the ringleader's fee - which gives the contractors an unfair tax advantage.

- NZPA